But country's infrastructure not ready to cope with huge numbers

Chinese tourists are flocking to Australia in staggering numbers in a development that has left hotels struggling to cope and is tipped to transform the nation's tourism industry.

Government figures last week showed that the number of Chinese short-term visitors overtook those from New Zealand for the first time in September. There were 113,500 visitors from China and Hong Kong during the month, compared with 110,000 from New Zealand, which has long been the No. 1 source of arrivals.

The surge in Chinese tourists is expected to spark a boom in the Australian tourism sector and make up for lagging visitor growth from Europe and the United States.

A report just released by research firm IbisWorld said Australia's tourism revenue is likely to increase to A$129.7 billion (S$131.6 billion) by 2020, up from A$118 billion last year.

"Strong economic growth in developing economies (in particular in Asia and the Middle East)... is creating entirely new markets for the Australian tourism industry, with China set to maintain its strong growth," the report said.

In the past 12 months, a record 1.2 million Chinese and Hong Kong visitors arrived in Australia - up 18 per cent from last year. There were 1.3 million visitors from New Zealand, an increase of 5 per cent. By 2025, the government expects to receive almost two million Chinese visitors a year, greatly eclipsing numbers from other nations.

Australian economist Craig James, from Commsec, said China's spot as the top-ranked source of visitors in September marked "a red-letter day for Australian tourism". He said analysts had been too focused on China's slowdown but had failed to acknowledge its "transition from a production-led economy to one driven by household spending".

"The 1.4 billion people in China are experiencing rising incomes and are lifting spending," he said in a briefing note last Monday. "Australia needs to ensure that we have the infrastructure to cope with perhaps 1.5 million Chinese tourists coming to our shores each year."

Singapore was the fifth-biggest source of visitors last year - with about 325,000 in the 12 months to June - behind New Zealand, China, the US and the United Kingdom. But Singaporeans were the second-biggest spenders per night, with an average spend of A$225, behind only the US at A$237. Singaporeans spent an average 17 nights during their stay and about 82 per cent were making a return visit. In contrast, about 53 per cent of Chinese visitors were making their first visit.

The tourism boom has led to a steep rise in hotel room rates, with occupancy in Sydney at record levels of 88 per cent.

Average room rates in Sydney increased 7 per cent last year from A$204 to A$233, according to research by STR Global. In Melbourne, occupancy was at 86 per cent and average rates increased by 5 per cent from A$173 to A$202.

The boom has prompted a rush to build new hotels around the country. There are plans to build 6,450 new rooms in Melbourne, 3,500 in Perth, 3,300 in Sydney and 2,800 in Brisbane, according to The Australian Financial Review.

IbisWorld's analysis said Australia had struggled in recent years because of heavy tourism advertising by countries such as New Zealand, low-cost airfares to other destinations and - until recently - a Australian strong dollar. But China's rising middle class and a falling dollar have led to the recent boom from China and other Asian nations.

"Since the global financial crisis, economic turmoil in Europe and a slow recovery in the US economy have reduced visitor numbers from these regions," the report said. "However, this has been offset by soaring inbound visitor numbers from Asia."

Tourism-related firms have warned that the sector is ill- equipped and needs to do more to prepare for the coming boom. There have been calls for Australia to add airline capacity and ensure staff have better foreign language skills.

"We just don't have enough airline capacity, we don't have enough transportation capacity, we certainly don't have enough hotel capacity," the head of casino operator Echo Entertainment, Mr Matt Bekier, said in a speech in September.

"We don't have enough language skills, our signs are not in foreign languages, we may not be competitive enough with our visa regulations. We can't just sit back and say, 'Well, our beaches are better.' "

A version of this article appeared in the print edition of The Sunday Times on November 15, 2015, with the headline 'Australia seeing surge of China tourists'. Print Edition | Subscribe

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